Kathmandu, July 5

The parliamentary panel on finance has foiled the government’s attempt to curb Nepal Rastra Bank’s autonomy as it has amended the controversial provision that makes it mandatory for the central bank to seek the permission of the finance ministry every time it wants to make extra expenses.

The house panel endorsed the Nepal Rastra Bank Bill today with some amendments in the draft bill, which will be forwarded to the full house for the final approval.

The draft bill had inserted the provision that would require NRB to mandatorily seek the government’s approval before allocating portion of net profit for funds other than revaluation reserve fund, monetary liability fund, general reserve fund, financial stability fund and net consolidated savings fund.

Amending section 41 (c) of the draft bill, the parliamentary committee has ensured full autonomy of the central bank.

NRB Governor Chiranjibi Nepal had argued that the NRB needs to create different funds while implementing monetary policy, and ensuring price and financial stability.

“The provision requiring approval of the finance ministry would prolong the decision-making, thereby the central monetary and regulatory authority will not be able to make prompt intervention as needed,” he had said.

However, in the meeting of the finance committee today, officials from the Ministry of Finance (MoF) reasoned that the ministry had inserted the provision in the draft bill as the NRB had allocated funds for the welfare of its staffers in the past.

Similarly, the parliamentary panel has also amended the provision of draft bill to bar deputy governors, executive directors and other officials of NRB from joining banks and financial institutions (BFIs) except government-authorised financial institutions.

The draft bill had provisioned cooling period of seven years for deputy governors and five years for executive directors to join other BFIs after their service period from the NRB ends. The amended bill has provisioned barring deputy governors and executive directors for three years and directors, officers and other staffers for two years after retiring from NRB.

The bill has completely barred central bank governor from taking any post in the BFIs after retirement, except for government-authorised financial institutions. Those wishing to serve in the BFIs after the given cool-off period would mandatorily need to take permission from the central bank.